Much like the global economic landscape, Canada’s economy is constantly in flux. The Gross Domestic Product (GDP) serves as a reliable indicator, providing insights and data into the economic health and prospects of the Canadian economy. 

The most recent figures indicate that GDP contracted 0.3% in August, following growth of 0.3% in July. The quarterly report, released on August 29th, revealed that GDP contracted 0.4% in the second quarter of 2025. This post provides a greater understanding of Statistics Canada’s latest numbers and their implications for borrowers in the Canadian market.

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Key Takeaways

• The latest GDP numbers show the Canadian economy shrank 0.3% in August.
• In 2024, GDP grew 1.5%.
• Preliminary estimates indicate that the economy is expected to grow 0.1% in September.

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Latest GDP Numbers in Canada

Gross domestic product (GDP) measures Canada’s economic activity based on the total value of all goods and services produced in Canada over a specific period. Dividing the total GDP by the population reveals the average economic activity each citizen contributes, referred to as GDP per capita. 

When tracked over many years, GDP can show whether Canada’s economy is growing or contracting. When GDP is on the rise, it is a sign of good economic health. Meanwhile, contracting GDP indicates that Canada is not working at full capacity or might be heading toward, or is already in, an economic recession. 

Statistics Canada reported that the Canadian economy shrank 0.3% in August, offsetting most of the 0.3% increase in July.

Sectors that saw contractions include:

• The transportation and warehousing sector declined 1.7% more than offsetting the expansion in July.
• The wholesale trade sector fell 1.2% after 3 consecutive monthly increases.
• Mining, quarrying, and oil and gas extraction contracted 0.7% partially offsetting the increases in June and July.
• The utilities sector contracted 2.3% due to widespread declines across all industries. 
• The manufacturing sector declined 0.5% with broad-based declines across durable and non-durable manufacturing industries. 

Sectors that saw gains include:

• The retail trade sector expanded 0.9% with 8 of 12 subsectors growing in August.

GDP Second Quarter of 2025

Statistics Canada’s Q2 GDP data recorded a 0.4% decline following a 0.5% gain in Q1. This contraction was driven by significant declines in the export of goods and a decrease in business investment in machinery and equipment. 

Exports declined 7.5% after increasing 1.4% in Q1. International exports of passenger cars and light trucks fell 24.7% due to the tariffs imposed by the US. Exports of industrial machinery, equipment and parts fell 18.5% and travel services declined 11.1%.  

International imports declined 1.3% in Q2 due to the counter-tariff response by the Canadian government. Imports of passenger vehicles fell 9.2% and travel services fell 8.5%.

Canada’s Economy Shrank 0.3% in August, With Growth Projected in September

August’s GDP shrank 0.3% with declines across goods-producing and services-producing industries. According to Statistics Canada’s preliminary estimate for September, GDP is expected to grow 0.1%. This advanced estimate is due to increases in finance and insurance, mining, quarrying, and oil and gas extraction, and manufacturing, offset by decreases in wholesale trade and retail trade.

Housing Investment Increases 

Residential investment, a key driver of the Canadian economy, increased 1.5% in Q2. This was driven by an increase in new construction, up 3.7% as higher work put in place and absorptions for apartments, primarily in British Columbia, fuelled growth. Ownership transfer costs rose 1.0% in Q2, recovering slightly from the significant 16.3% decline in Q1. Meanwhile, residential renovations fell 1.1%.

Real Estate Rental and Leasing vs. Home Sales

The real estate rental and leasing sector rose slightly in August for the fifth consecutive month. August had its best month of home sales since 2021, led by higher sales in Montreal, Greater Vancouver and Ottawa. Meanwhile, asking rents in August declined for the 11th straight month, falling 2.3% nationally.

Household Spending Increases 

Household spending rose 1.1% in Q2, after an increase of 0.1% in Q1. Growth in household spending was primarily driven by new trucks, vans and sport utility vehicles (+5.6%). This was followed by a 1.3% increase in insurance and financial services, and a 0.9% increase in food and beverage services. These were offset by reduced spending on electricity (-3.2%) and alcoholic beverages (-3.9%).

Frequently Asked Questions

Final Thoughts

The latest GDP numbers paint a complex picture of the Canadian economy. The bond futures market and economists are pricing in a rate hold at the December announcement.

With the economy reacting daily to interest rates, this may be an opportune time to prepare your finances if you are looking to purchase a home or renew or refinance your mortgage. Reach out to nesto mortgage experts to understand your borrowing capacity and solidify your mortgage strategy.

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At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and the quality of their advice. nesto aims to transform the mortgage industry by providing honest advice and competitive rates through a 100% digital, transparent, and seamless process.

nesto is on a mission to offer a positive, empowering and transparent property financing experience – simplified from start to finish.

Contact our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.

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